Market Trends of APAC Contract Logistics Industry
China is leading the way in the contract logistics market
As customer demand in China continues to grow, companies are being pressed to create more advanced distribution channels. This is due to the increased demand for higher-priced consumer goods and perishable foods that require logistics management that includes better security and handling. This is only one of the deeper changes in these economies that point to a significant growth in the demand for high-end services in both China and developing countries over the next few years.
China is expected to lead the Asia-Pacific contract logistics market. The contract logistics market in China is growing steadily. This has created new challenges for the sector, such as the need to expand product and service offerings, the need for more efficient networks, and the need to control variable costs.
The Chinese contract logistics market is mainly concentrated in consumer retail, automotive, medicine, electronics, and other industries, with the consumer retail industry making up about 50% (compared to the pre-pandemic period of 2019).
For Instance, in Febuary 2023, Cainiao Network, a logistics arm of e-commerce giant Alibaba Group Holding, announced a new agreement to build the biggest parcel lockers network in Poland with German courier giant Deutschlandpost DHL Group. The agreement, with Deutsche Post ECommerce Solutions, a division of Deutsche Post E-commerce Group, provides a foothold for the Chinese technology giant into one of Europe's fastest-growing e-commerce markets. According to the agreement, Deutsche Post ECommerce Group (DHL) and Cainiao Network (the logistics arm of Alibaba Group Holding) will jointly invest 60 million euro (USD 64,75 million) in the construction of parcel lockers throughout Poland. The two companies will combine their existing networks in order to provide consumers with more convenient access to parcel lockers, which will be installed at key locations with modern, easy-to-use interfaces. DHL's parcel shop network in Poland has already reached 1,200 locations, and DHL's parcel lockers have tripled in quality and speed in the past three years.
Demand from the Manufacturing and Automotive Sector is Driving the Contract Logistics Services
Asia Pacific is one of the world’s manufacturing hubs, accounting for almost 48.5% of global manufacturing output. Today, more countries around the world are building advanced manufacturing capabilities to support Industry 4.0 growth. Industry 4.0 is revolutionizing the way global manufacturers produce and distribute their products. Cloud computing, analytics, AI, and machine learning are just a few of the technologies that leading businesses are looking to incorporate into their operations.
In 2022, China exported around 3.59 trillion USD worth of goods, which represents a growth of around 7 percent compared to 2021. Vietnam has become an increasingly attractive market for manufacturers due to the country's regional centrality, high market integration, and low production costs. Samsung, Apple, Nintendo, LG, Panasonic, and Intel are all based in Vietnam. Vietnam is also making progress in the value chain by positioning itself as a very attractive market for mid-tech due to its electronic sector.
In March 2023, China's industrial output increased by 3.9% YoY in the first quarter of 2023, according to the NBS, indicating a slight improvement in the country's economic recovery in the wake of the COVID-19 pandemic. Value-added industrial output grew by 3 percent YoY, representing a YoY increase of 0.3 percentage points compared to the previous quarter. In 2022, Chinese car manufacturers produced 27.02 m units, an increase of 3.4% YoY, while sales rose 2.1% YoY to 26.86 million. China is consolidating its position as the world's most attractive manufacturing hub, while Thailand is benefitting from cost profile improvements.